Renting or leasing a house is very common, and especially with people that are just getting started with life. This is because it is cheaper than purchasing a home, even though in the long run, purchasing a home is cheaper. The reason why people opt to rent apartments is because they can’t put up all the money to purchase one at once. They therefore would rather rent as they save up to buy their own. They could take very long saving up for a house with the high cost of living nowadays. There are kids to take care of, along with other responsibilities that ultimately require people to spend. Despite that, in this article, we are going to look at the benefits of owning your own home.
Homeownership is an investment
The best thing about buying a home is the fact that it’s value increases over time, unlike other things like cars, which decrease in value. Even when there is a recession, the value of homes continues rising.
The investment and equity work directly together when it comes to owning a home. For every mortgage payment, there is an amount that covers interest, while the rest pays the principal balance. The equity in this case, is the percentage of the home that you already own, while paying the principal is like saving money for future reinvestment in the home, or a new home.
Take advantage of tax benefits
Owning a home is encouraged by the federal government, and it even offers incentives such as deducting interest from the mortgage payments on the income tax return. This is especially done during the beginning of a mortgage. Even private mortgage insurance (PMI) and some purchases related to the home also get incentives.
Stabilize your housing costs
The advantage of a fixed-rate mortgage is the fact that one has the same mortgage payment for the period of the loan, while rental payments continue to go up. This means that one can manage their expenses better.
Gain control over your living space
When you are the owner of the house, you have full control over the living space. You can modify it the way that you want, unlike rentals that limit what you can do. Also, when cash funds to reinvest in the home aren’t available, one can always turn to their equity for financing.
The Best Home Loan in Singapore
Being that we are talking about investing in a home, we can also look at the best home loan Singapore. We are going to look at over 100 mortgage packages across 16 banks in Singapore that have been analyzed to make it easier for you to choose the home loan of your choice. Remember, buying a home is like the biggest investment in a lifetime, and you would want to go for the best financial option. Below is a list of the banks that provide some of the best home loan packages when going for the cheapest loans:
- OCBC Bank
- Standard Chartered
- CIMB Bank
- Bank of China
- Hong Leong Finance
- Singapura Finance
Unlike other types of loans such as personal loans, when taking a home loan, one needs to look at the interest rate type, and not the interest rate. The type of the loan is just like airline tickets, the business class tickets are costlier than the economy ones. In the case of home loans, there are two types, fixed rate and floating rates home loan. When taking a home loan, one needs to look at the following factors:
- The reference rate
- The lock in
- The number of years to repay
- The legal subsidy (refinance)
- Valuation subsidy
- Valuation subsidy (refinance)
- Fire insurance (refinance)
- Partial repayment penalty
- Full redemption penalty
- Cancellation fees
- Pricing reset date
- Minimum loan
- Processing fee
- Other conditions
It is advisable for first time buyers to go for stable interest rate packages since they are easily understandable.
It is important for one to own a home since in the long run, it is beneficial to you and your family. You get to save a lot, and you can modify it however you want. Financing can be quite a problem but there are home loans available. You can go for the option that suits you best, and if you’re in Singapore, you might want to consider one of the banks mentioned above for financing.